Contracts row over 'cheap loans' KIM MACDONALD, The West Australian Updated January 20, 2012, 3:49 am A WA iron ore developer claims Chinese manufacturers are winning contracts on local projects partly because they offer vendor finance at half the rate charged by Australian banks. As the Federal Government investigates claims local companies are pressured to buy Chinese supplies, managing director of Pluton Resources Tony Schoer said China's success was driven largely by commercial realities. Mr Schoer said many local resources companies had little choice but to use Chinese vendor finance, for which money was lent by the manufacturer to buy their products, usually at half the cost of local funds. Pluton expects to borrow up to $600 million in vendor finance for a plant at its Irvine Island project, off WA. "The Chinese are willing to take bigger risks and provide cheaper finance," Mr Schoer said. "Put yourself in my position. Where does an Australian company go?" The Australian Metal Workers Union claims the offshore work trend is behind last year's drop in Kwinana manufacturing jobs from 14,000 to 12,000. Secretary Steve McCartney said three recent Wheatstone contracts awarded abroad could have provided more than 6000 local jobs and 1500 apprenticeships. The Australian Steel Institute called on the State Government to help boost local content by forcing multinationals to station the bulk of their design and procurement teams working on WA resources projects in Perth. ASI director James England said the local presence would give Kwinana workshops a better chance of winning contracts. "We have a situation where local workshops have to travel abroad to try to build relationships with the multinationals so they can pitch for work on WA projects," he said. But a spokesman for Commerce Minister Simon O'Brien said most operators already had a strong presence in WA. Capacity constraints in WA and the commercial realities of running a business made it necessary for companies to spread their teams across the globe. Any move to mandate or regulate for higher local content was against World Trade Organisation obligations and would damage WA's trading and investment reputation.
PLV Price at posting:
24.8¢ Sentiment: Buy Disclosure: Held
